San Francisco’s Universal Health Care Model

As Congress works on bills that could provide health care coverage for all, one city has already done that. San Francisco began an ambitious program three years ago to provide care to every one of its uninsured residents. The city’s effort is a laboratory of sorts for the kinds of changes under debate in Congress.

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SARAH VARNEY: It’s a busy morning at North East Medical Services, a large community clinic in San Francisco’s Chinatown. Tse Dong Chow(ph) is here for a check-up. He’s a trim and energetic 60-year-old wearing a pressed brown corduroy jacket, a Polo shirt, and jeans.

Mr. TSE DONG CHOW: (Foreign language spoken)

VARNEY: Chow works part-time as a Chinese language instructor, but could never afford a private health plan. So earlier this year he signed up for San Francisco’s public health plan, Healthy San Francisco. Based on his income, he pays a premium of $50 a month and in return receives comprehensive medical care.

Mr. CHOW: (Foreign language spoken)

VARNEY: Speaking through a translator, Chow says he hadn’t seen a doctor in four years.

Unidentified Woman (Translator): In the past when he’s sick, he would read medical books. Then he asked his relatives from China to help buy some medication and send it over for him.

VARNEY: With his Healthy San Francisco membership, Chow now sees a primary care doctor. He’s been diagnosed with severe hypertension and for the first time is on medication to control it. His physician, Dr. Ted Li, says Tse Dong Chow is typical of the patients he treats under San Francisco’s health plan.

Dr. TED LI (North East Medical Services, San Francisco): We see a lot of patients who have delayed their medical care and who have had chronic problems for a number of years, but have developed complications from these chronic medical problems and finally come in to see us.

VARNEY: Healthy San Francisco is not insurance. Enrollees aren’t covered for medical care outside of the city’s boundaries. Instead, they have access to a network of public and private clinics and hospitals within San Francisco. The program costs the city $280 per enrollee per month, significantly more than $50 premium Chow is paying. The city makes up the difference with public dollars, patient co-pays, and mandatory employer contributions from large and medium-sized businesses. Tangerine Brigham oversees the health plan.

Ms. TANGERINE BRIGHAM (Community Health Program Officer, Healthy San Francisco): Prior to Healthy San Francisco, if someone was uninsured, they had a very difficult time accessing care. It was somewhat of a fragmented system, they didn’t know when to receive services. Healthy San Francisco creates a more coordinated system of care for uninsured.

VARNEY: The program allows each patient to select a home clinic that coordinates care and manages any chronic conditions. Medical records are now in one centralized computer system. Patients are expected to seek non-emergency care at their home clinic.

The program is now in its third year and some of the early data show the focus on coordinated and preventative care is working. Hospital admissions among plan members have dropped sharply, and the average number of days in the hospital has been cut almost in half, suggesting chronic illnesses like diabetes, asthma, and hypertension are better controlled.

Researchers are also beginning to evaluate the economic effects of Healthy San Francisco. Some businesses feared the mandatory employer contributions that help fund about 10 percent of the program would lead to widespread layoffs.

Mr. WILLIAM DOW (Health Economist, U.C. Berkeley): There’s no evidence at all that Healthy San Francisco’s payer-plan employer mandate is adversely affecting employment.

VARNEY: Professor Will Dow, a health economist at U.C. Berkeley and a Bush administration advisor, found that businesses in San Francisco did not lay off workers in response to the city’s health care mandate. But Kevin Wesley from the Golden Gate Restaurant Association says businesses are hurting. He says some restaurants have stopped serving lunch or cut down on the number of nights they serve dinner. That may not lead to higher unemployment, says Wesley, but it does affect employees’ incomes.

Mr. KEVIN WESLEY (Golden Gate Restaurant Association): Restaurants have an increased expense and they’ve reacted the only way they can in a recession and that is to try to pass the cost along to the customer and reduce their overhead as best they can in order to survive.

VARNEY: Wesley’s group has sued to block San Francisco’s health spending requirement and the case is on appeal to the U.S. Supreme Court. All the major health care proposals in Congress include employer mandates from medium and large firms. And there’s been prolonged debate over how much those businesses should kick in. For that reason, Healthy San Francisco’s impact on employers is instructive, says Gail Wilensky. She oversaw the federal Medicare and Medicaid programs for the first President Bush. But Wilensky says the lessons learned from San Francisco’s experiment are limited.

Ms. GAIL WILENSKY: The question of how employers will respond when they face an increase in labor costs depends on how competitive the industry is and whether or not there are alternative ways to provide the service. So it’s why, for example, you see an increase in the number of self-checkout counters in supermarkets.

VARNEY: Restaurants and retail stores can’t easily cut back on their labor costs, says Wilensky, so they’re left with raising prices, and that’s what many restaurants in San Francisco have done, by including a 4 percent health care surcharge on menus. So far it’s a surcharge San Franciscans seem willing to pay.